5-Hour founder explains common sense approach

Manoj Bhargava, founder and CEO of 5-Hour Energy-maker Living Essentials, presented a view of brand building at BevNET Live that cuts against convention by dispensing with consultants, employing “trunk-slammers” (small distributors who work out of their cars) and leaning heavily on common sense.

While other marketers at the conference stressed the need for beverages to have strong brand identities and attentive early-stage distribution, Bhargava said “for us, anyway, the product is everything.”

“You can tell from the name, we didn’t hire consultants to come up with it,” he said.

In front of a rapt audience, Bhargava explained that turned 5-Hour into a $350 million brand:Iistead of competing with Coke and Pepsi in the beverage cooler, he decided to compete with lighters and key chains at the convenience store counter. They tested their concept at a GNC – a chain, he noted, that isn’t known for its high foot traffic – and achieved a level of sales that convinced him the brand could succeed.

From there, the company has used “trunk-slammers” to get the product onto counters. The company still uses them, Bhargava said. As a result, he doesn’t know how many stores carry his product, nor does he know how, exactly, his product gets to each of those stores.

Along the way, the company improvised solutions as they arose. A convenience chain once agreed to accept the product, Bhargava said, but only if the product could hang on a hook. So the company bought stick-on hangers and attached them to the caps.

“We made all kinds of mistakes… our view was ‘just sell product’,” he said.

Bhargava common-sense standing extended to his view of the market. He said people have asked him if the explosion of competition made him feel like the category had been validated. No, he said. In his view, the only person who can validate a category is the customer that takes money out of his wallet and buys the product.

Now that the brand has established itself, Bhargaya said, he’s more afraid of small companies than he is of big ones. Big companies, he said, are “like attacking an elephant. You hit. You move. They don’t even know you hit them” – though he noted that big firms aren’t without their strengths.

“Big guys have capital, which they use pretty well for suing you. It’s not nice, but it’s a strategy.”

And it’s a strategy that Living Essentials now employs. Bhargaya said he currently has seven staff lawyers, plans to add two more, and spends more than $1 million per month in legal fees.

“We’ve become semi-big now, so we’re going to be on the suing side,” Bhargava said.